“We achieved company comparable sales growth of 6.3% in the first
quarter, reflecting strong traffic to the Pier 1 Imports brand,” stated
Alex W. Smith, President and Chief Executive Officer. “We are pleased to
see increasing strength in e-Commerce, which exceeded our plans and
reached 9% of sales for the quarter. At the same time, our stores
continue to serve as an important and productive gateway to Pier1.com,
with approximately one-quarter of our online transactions originating at
the store and one-third of orders placed at home being picked up
in-store. Given the momentum we are experiencing, we now anticipate that
sales through Pier1.com will exceed $200 million in fiscal 2015.
Nevertheless, the retail environment remains highly promotional and is
pressuring gross profit in the near-term. As a result, we are adjusting
our full-year earnings forecast accordingly.”

“Our expanded spring and outdoor assortments resonated with customers
and were buoyed by a strong marketing message. Our talented merchants
continue to curate exceptional merchandise which, combined with our ‘1
Pier 1’ strategy, creates an engaging shopping experience. We believe
this is an exciting time to be a retailer – we’re seeing a profound
shift in the shopping behavior of our customers. Our timely
transformation from a brick-and-mortar retailer to one with full
omni-channel capabilities has us well positioned to seize upon this
change and drive brand growth.”

First Quarter Fiscal 2015 Results

For the first quarter ended May 31, 2014, the Company reported net
income of $15.1 million, or $0.16 per share, compared to last year’s
first quarter net income of $20.3 million, or $0.19 per share. Total
sales for the first quarter were $419.1 million, a 6.1% increase versus
$394.9 million in the year-ago quarter. Company comparable sales
increased 6.3% during the first quarter, attributable to increases in
total brand traffic, conversion and higher average ticket.

Gross profit for the quarter was $167.7 million, approximately flat
compared to gross profit of $167.6 million for the same period last
year. As a percentage of sales, gross profit in the first quarter of
fiscal 2015 was 40.0%, compared to 42.4% in the year-ago period.

First quarter selling, general and administrative expenses leveraged
slightly to $131.5 million, or 31.4% of sales, compared to $125.5
million, or 31.8% of sales in the first quarter of last year.

First quarter EBITDA (earnings before interest, taxes, depreciation and
amortization) was $36.4 million compared to $42.3 million in the first
quarter of last year. Operating income for the first quarter was $25.8
million compared to $33.2 million in the first quarter of fiscal 2014.

Net interest expense for the first quarter was $1.7 million, compared to
$0.4 million during the same period last year. The increase is primarily
attributable to the Company’s new $200 million senior secured term loan,
which closed in the first quarter.

Balance Sheet and Share Repurchase Program

As of May 31, 2014, the Company remained in strong financial condition
with $220.6 million of cash and cash equivalents. The Company had $200
million outstanding under its senior secured term loan, and no cash
borrowings under its $350 million asset-based revolving credit facility.
Inventory totaled $417.6 million, an increase of 9.0% compared to $383.3
million in the year-ago period, which was in line with management’s
expectations. Capital expenditures totaled $15.3 million for the quarter
and were primarily used for new store openings, existing store
improvements and infrastructure and technology development, including
work on the Company’s new e-Commerce fulfillment center in Columbus,
Ohio and enhancements to the Company’s e-Commerce platform.

The Company repurchased 5,701,812 shares of its common stock during the
first quarter at an average cost of $18.84 per share and a total cost of
approximately $107.4 million. Of this amount, 630,000 shares were
purchased at an average cost of $17.92 per share and a total cost of
$11.3 million under the new $200 million share repurchase authorization
announced in April 2014. Subsequent to the end of the first quarter, the
Company repurchased an additional 390,000 shares of its common stock at
an average cost of $17.55 per share and a total cost of approximately
$6.8 million. To date the Company has repurchased 1,020,000 shares of
common stock under the April 2014$200 million share repurchase program
at a total cost of approximately $18.1 million and $181.9 million
remains available for future repurchases under the program. As of June
18, 2014, approximately 93.5 million shares of the Company’s common
stock were outstanding.

Fiscal 2015 Financial Guidance

The Company provided the following updated financial guidance for fiscal
year 2015:

Company comparable sales growth, which includes e-Commerce, in the
high-single digits;

Selling, general and administrative expenses relatively flat as a
percentage of sales compared to fiscal 2014;

EBITDA growth in the range of 9% to 14%, compared to previous guidance
for growth of 11% to 17%;

Interest expense of approximately $11 million;

Earnings per share in the range of $1.14 to $1.22, utilizing a fully
diluted share count of 95 million shares, representing year-over-year
growth of 13% to 21%. This compares to previous guidance of $1.16 to
$1.24 utilizing a fully diluted share count of 96 million.

Updated Growth Targets

In response to the early success of its ‘1 Pier 1’ omni-channel
strategy, the Company also announced that it now expects to achieve
e-Commerce sales of at least $200 million in fiscal 2015, and e-Commerce
sales of at least $400 million in fiscal 2016. This compares to previous
expectations for e-Commerce sales to represent 10% of total sales by the
end of fiscal 2016. The Company reiterated its previously stated goals
for sales per retail square foot of $225 and operating margins of
approximately 11% to 11.5% by the end of fiscal 2016.

The Company will host a live conference call to discuss fiscal 2015
first quarter financial results at 10:00 a.m. Central Time today, June
19, 2014. Investors will be able to connect to the call through the
Company’s website at www.pier1.com.
The conference call can be accessed by linking through the “Investor
Relations” page to the “Events” page, or you can listen to the
conference call by dialing 1-800- 498-7872, or if international,
1-706-643-0435. The conference ID number is 51384062.

A replay will be available after 12:00 p.m. Central Time for a 24-hour
period and the replay can be accessed by dialing 1-855-859-2056, or if
international, 1-404-537-3406. The conference ID number is 51384062.

The Company will host its annual meeting of shareholders on Friday, June
20, 2014 at 10:00 a.m. Central Time. The meeting will be held on the
Mezzanine Level, Conference Center Room C, Pier 1 Imports, Inc.
Headquarters, 100 Pier 1 Place, Fort Worth, Texas 76102.

Financial Disclosure Advisory

The Company reports its financial results in accordance with U.S.
generally accepted accounting principles (GAAP). This press release
references a non-GAAP financial measure, EBITDA.

EBITDA represents earnings before interest, taxes, depreciation and
amortization. Management believes EBITDA is a meaningful indicator of
the Company’s performance that provides useful information to investors
regarding its financial condition and results of operations. Management
uses EBITDA, together with financial measures prepared in accordance
with GAAP, to assess the Company’s operating performance, to enhance its
understanding of core operating performance and to compare the Company’s
operating performance to other retailers. This non-GAAP financial
measure should not be considered in isolation or used as an alternative
to GAAP financial measures and does not purport to be an alternative to
net income as a measure of operating performance. A reconciliation of
net income to EBITDA is shown below for the periods indicated (in
millions).

Three Months Ended

May 31, 2014

June 1, 2013

Net Income (GAAP)

$

15.1

$

20.3

Add Back: Income Tax Provision

9.0

12.5

Interest Expense, net

1.9

0.6

Depreciation and Amortization

10.4

8.9

EBITDA (non-GAAP)

$

36.4

$

42.3

Management’s expectations and assumptions regarding future results are
subject to risks, uncertainties and other factors that could cause
actual results to differ materially from the anticipated results or
other expectations expressed in the forward-looking projections or
statements included in this press release. Any forward-looking
projections or statements should be considered in conjunction with the
cautionary statements and risks contained in the Company’s Annual Report
on Form 10-K, and other filings. Refer to the Company’s most recent SEC
filings for any updates concerning these and other risks and
uncertainties that may affect the Company’s operations and performance.
The Company assumes no obligation to update or revise its
forward-looking projections or statements even if experience or future
changes make it clear that any projected results expressed or implied
will not be realized.

Pier 1 Imports, Inc. is the original global importer of home décor and
furniture. Information about the Company is available on www.pier1.com.